nephros, inc. (nasdaq: neph)...product water delivered the dsu-h is fda cleared (bacteria &...
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Nephros, Inc. (Nasdaq: NEPH)Q3 2020
Safe Harbor Statement
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Certain statements in this management presentation constitute “forward-looking statements.” Such statements include those regarding the efficacy and intended use of our technologies under development, the timelines and strategy for bringing such products to market, the availability of funding sources for continued development of such products, and other statements that are not historical facts, including statements that may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond our control. Actual results may differ materially from the expectations contained in the forward-looking statements. Factors that may cause such differences include, but are not limited to, that (i) we face significant challenges in obtaining market acceptance of our products, which could adversely affect our potential sales and revenues; (ii) product-related deaths or serious injuries or product malfunctions could trigger recalls, class action lawsuits and other events that could cause us to incur expenses and may also limit our ability to generate revenues from such products; (iii) we face potential liability associated with the production, marketing and sale of our products, and the expense of defending against claims of product liability could materially deplete our assets and generate negative publicity, which could impair our reputation; (iv) to the extent our products or marketing materials are found to violate any provisions of the U.S. Food, Drug and Cosmetic Act (the “FDC Act”) or any other statutes or regulations, we could be subject to enforcement actions by the U.S. Food and Drug Administration (the “FDA”) or other governmental agencies; (v) we may not be able to obtain funding if and when needed or on terms favorable to us in order to continue operations; (vi) we may not have sufficient capital to successfullyimplement our business plan; (vii) we may not be able to effectively market our products; (viii) we may not be able to sell our water filtration products or chronic renal failure therapy products at competitive prices or profitably; (ix) we may encounter problems with our suppliers, manufacturers and distributors; (x) we may encounter unanticipated internal control deficiencies or weaknesses or ineffective disclosure controls and procedures; (xi) we may not be able to obtain appropriate or necessary regulatory approvals to achieve our business plan; (xii) products that appeared promising to us in research or clinical trials may not demonstrate anticipated efficacy, safety or cost savings in subsequent pre-clinical or clinical trials; (xiii) we may not be able to secure or enforce adequate legal protection, including patent protection, for our products; (xiv) we may not be able to achieve sales growth in key geographic markets; and (xv) the effects of the Covid-19 pandemic may be more severe than we currently anticipate. More detailed information about us and the risk factors that may affect the realization of forward-looking statements, including the forward-looking statements in this management presentation, is set forth in our filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and our other periodic reports filed with the SEC. We urge you to read those documents free of charge at the SEC’s web site at www.sec.gov. We do not undertake to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise, except as required by law.
Nephros-at-a-Glance
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• Nasdaq: NEPH
• Market Cap: ~$65 million
• Analyst Coverage• Benchmark Company • Maxim Group• Taglich Brothers
• Top Institutional Holders• Wexford Capital• Pessin Family• Parkman Healthcare Partners• Bard Associates
• Revenue• $10.3M in 2019• 15 consecutive quarters of 50%+
revenue growth (until Covid)• Post-pandemic expectations are strong
• Management Team• Mature, long tenured• Strong team performance record
• Market Opportunity• Multiple growth engines including new
product lines
• Cap Structure• $7M cash with clean balance sheet
Our Vision & Mission
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Debris Retained Product Water Delivered
The DSU-H is FDA Cleared (bacteria & virus) to aid in infection control
for up to 180-days
Nephros provides innovative and superior technologies that provide water safety solutions, delivered to our customers with unparalleled quality, reliability and service.
Nephros: Three Business Segments
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Established and growing water filtration base business plus a recently launched pathogen detection productand potentially transformative dialysis device to be launched in 2020
Water Filtration
100% of historical revenue
Recurring revenue: razor / razor blade model
High gross margins (55-60%)
Cash flow breakeven
Impressive revenue growth: 62% average growth YoY for 15 consecutive quarters
Growing end-markets: hospitals, hospitality / food service, dialysis
Leading provider of ultrafilters to protect from waterborne pathogens
Pathogen Detection (PluraPath™)
Growing Base Business New Product Line Launches
HDF Dialysis
$8 billion highly fragmented global market Real-time data (results in 1 hour) 15 different assays simultaneously DialyPathTM and SequaPathTM in the pipeline
Targeting 2020 relaunch Over 15% of patients on
HDF in Europe
Mobile qPCR water-borne pathogen detection system
Enables hemodialysis machine to perform hemodiafiltration
treatment
Nearly 4 Years of Consistent Growth
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50% CAGR – Revenues, Customers, Share Price
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2016 2017 2018 2019
Revenue & Share Price 2016-2019
Net Revenue Share Price
2020 – Pandemic Interruption
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Temporary pandemic conditions have impacted new customer acquisition and the restaurant & hospitality business
Water Filtration
What Does a Nephros Ultrafilter Do?
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Nephros Ultrafilters protect patients and consumers from water-borne pathogens
Debris Retained Product Water Delivered
The DSU-H is FDA Cleared (bacteria & virus) to aid in infection control
for up to 180-days
Actual Backwash of a Nephros Ultrafilter After 6 Months
Nephros Ultrafilters stop all bacteria, viruses,
endotoxins
Nephros Proprietary Membrane Technology
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NephrosUltrafilters
(0.005 μm pore size)
Conventional Microfilters
(0.2 μm pore size)
Endotoxins
Bacteria
Nephros ultrafilter pore size: 40x smaller than conventional filters
Viruses
Conventional microfilters can stop most, but not all bacteria and are insufficient in filtering virusesand endotoxins
3 – 28xcompetitor
Nephros Proprietary Membrane Technology
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Nephros filters dramatically improve performance at a smaller cost per day vs. conventional filters
Nephros’ proprietary membrane technology offers smallest pore size without compromising flowrate and filter life
KEY FEATURES IN WATER FILTERS
Filtration(Pore Size)
Filter Life
Flow Rate(Membrane Surface Area)
LEADING COMPETITOR* NEPHROS
0.2 μm 0.005 μm40x
Smaller Pore Size
31-62 days 90 – 360 days 2 – 3x competitor
0.3-2.8 m2 0.06-0.1 m2
* versus Pall AquaSafe
Aether Water Systems (Commercial Market)
CoffeeFountain Soda
IceTea
Pathogen Detection
Pathogen Detection: Introducing PluraPath™
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Performs 15 separate DNA/RNA assays from a 1-liter water sample in approximately 1 hour
Step 1: Collect 1-liter sample into sterile bagStep 2: Concentrate test sample w/ Nephros ultrafilterStep 3: Aliquot concentrate into an 8-well PCR test stripStep 4: Initiate portable real-time thermocycler Step 5: Thermocycler runs automatically for about 30 minutesStep 6: Upload data and review report w/ Nephros Mobile App
Custom Pelican Case for Easy Portability
Portable, Real-time Open Source Thermocycler
Nephros uses the same distributors as the filtration businessto market PluraPath™
Largely Recurring Revenue
Expecting similar margins as the filtration business
Additional Pathogen Detection Launches
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Transformation from a “water filter” company to a“water solutions” company
Nephros will use its base pathogen detection technology to launch additional detection products
DialyPath™ SequaPath™
Dialysis clinics much shut down when contaminated
Current standard test (limulus amebocyte lysate(“LAL”)) routinely take over 48 – 72 hours and areshipped to a central laboratory
DialyPath™ uses PluraPath™ technology and is ableto test endotoxins in real-time (1 hour)
Plan to launch DialyPath™ in Q2 2020
Entry into Dialysis Pathogen Detection
Reduction in time to results
Provide estimate of endotoxin levels equivalent to LAL
Entry into Biome Mapping Services
Ability to process 96 samples at once
Ability to recognize over 20,000 different bacteriareferences in one day
Will offer this product as a service
Expected launch in late 2020
Provide estimated levels of 6 gram-negative bacteria
Full building biome map
Provides estimated levels of ANY known bacteria
Specialty Renal Products, Inc. (SRP)
Specialty Renal Products
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SRP Organizational Objective:
Develop, Launch, and Market a tool to arm the clinician with the ability to safely and easily implement Hemodiafiltration (HFD) into the course of care for patients with end stage renal disease.
SRP HDF Gen-2
Clinical Value
Improved Outcomes
Ease of Use
Reduced Cost
Supported by Clinical
Research
SRP HDF Gen 2
Tony RobinsonVP Dialysis Operations• EVP/COO CVR Medical• Regulatory Affairs Leader, BSN Medical• Expert in FDA compliance processes
Andy Astor, MBAPresident & CEO• President/CFO, OpenSCG (acquired by AMZN)• Founder/CEO EnterpriseDB, VP Asurion, VP D&B, EY• MBA Wharton, BA Mathematics Clark University
Daron Evans, MS, MBAScience Advisor & CEO, Specialty Renal Products• CFO Nile Therapeutics, Inc. (now CAPR)• J&J, Arthur D. Little, Booz Allen & Hamilton• MBA Duke, BS Chem Eng, MS Biomed Eng
Michael MilmanVP Research & Development• 10+ years Nephros, 15+ years design and dev.• R&D engineer with Stryker• BS Mechanical Engineering, Lehigh University
Vashone Thomas, MSVP Quality and Regulatory• Previously Integrated Dental Systems• 10+ years quality leadership• MS Pace University
Shane SullivanVP Sales• Nephros 7+ years• 10 years Regional Manager at Thermo Scientific• BS Business, USC
Greg LucasPresident, Commercial Water Systems• Founder, Aether Water Systems (acquired 2018)• Executive at Gallo Wines
• Molecular genetics, pathogen detection, food safety• Professor of Microbiology/Epidemiology, U Nevada • PhD Epidemiology
Kimothy Smith, PhD, DVMVP Pathogen Detection Products
Leadership Team
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Nephros-at-a-Glance
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• Nasdaq: NEPH
• Market Cap: ~$65 million
• Analyst Coverage• Benchmark Company • Maxim Group• Taglich Brothers
• Top Institutional Holders• Wexford Capital• Pessin Family• Parkman Healthcare Partners• Bard Associates
• Revenue• $10.3M in 2019• 15 consecutive quarters of 50%+
revenue growth (until Covid)• Post-pandemic expectations are strong
• Management Team• Mature, long tenured• Strong team performance record
• Market Opportunity• Multiple growth engines including new
product lines
• Cap Structure• $7M cash with clean balance sheet
Thank you
Nephros, Inc.380 Lackawanna Place
South Orange, NJ 07079P: 201.343.5202
www.nephros.com
Investor Relations Contacts:
Kirin Smith, PresidentPCG Advisory
Andy Astor, CEONephros, Inc.
Thank You